Mark Blinch/Reuters
Wall Street's big money is not ready to dive into the booming cannabis industry.

Companies in the legal-pot industry will generate nearly $7 billion in sales this year — a 25% growth rate — according to ArcView Market Research, a group that tracks the market.

But the investors with the deepest pockets are likely to sit on the sidelines for some time to come.

MedMen, a company that consults for the medical-marijuana industry, launched the $100 million MedMen Opportunity Fund last week with the goal of breaking into large markets with limited licenses.

MedMen founder and CEO Adam Bierman told Business Insider he expects that the rest of the investors in this first round to be high-net-worth individuals and family offices. The Chicago-based Wicklow Capital, which is the anchor investor in this round, would fit the description.

But many larger investors, with billions in assets under management, may sit this out because pot is illegal under federal law.

The 25 states where some ownership of cannabis is legal have been off the hook partly because the Obama administration decided in 2009 that prosecuting medical-marijuana patients would be an inefficient use of resources.

Now, to invest, the bigger players would have to carve out a special vice fund, and any monies poured into the industry may violate their sometimes-strict mandates.

Virtually no established publicly traded companies are dedicated to the cannabis industry in the US; at least 55 traded as penny stocks last year, according to Bloomberg.

Nasdaq declined comment on the specifics. But MassRoots said the exchange thought it was assisting in selling an illegal substance — something MassRoots identified as a risk factor in its regulatory filing to go public.

But five key states, including California and Massachusetts, are expected to vote on whether to legalize marijuana in the fall.

"That is the inflection moment" for the hesitation institutional capital has toward the industry, Bierman said.

But real mainstream participation may still be far off.

"We are not close, here in the US, to a place where you're going to see real capital-market exposure and participation and activity for this space," Bierman said. "We are not close here in the US to seeing marijuana become federally legal."

Even if individual perceptions change, many big-money investors do not have the flexibility to quickly change their mandates, he said.

The industry got a bit of a lift from Microsoft last week. The tech giant announced a partnership with Kind Financial, a pot-software company, to help cannabis-business owners better comply with regulations. Microsoft had never partnered with a company in the industry before, and it was the first major corporation to do so.

Since the report was published in February, some states including Ohio and Louisiana have legalized some degree of marijuana use.Arcview Market Research, New Frontier Data
Though Microsoft is not getting involved in the retail side of things, its involvement is still huge.

Because it's still a fledgling industry, people like Bierman have to "make" the market.

On one hand, MedMen and Privateer Holdings, a private-equity firm focused on legal weed, are set up just as they would be in another industry.

But then it's cannabis, and when it comes to valuing a company for investment purposes, for example, there aren't traditional examples, in the US at least, for comparison.

So it can end up being a take-it-or-leave-it pitch to investors who want in.

If they do take it this early, Bierman said, they are in for returns that would never be repeated again.